Dan Harrison, Judith Ireland

Indigenous business would be given tax-free status, parents would lose family payments if their children wagged school, and welfare recipients would be prevented from spending their benefits on drugs and alcohol under a radical plan to tackle inequality and unemployment in Australia.

The review, headed by mining magnate Andrew Forrest and released on Friday, also recommends the myriad working-age payments in Australia be reduced to a single unemployment benefit and government departments be forced to increase their number of indigenous employees.

The Abbott government last October asked Mr Forrest to review indigenous employment and training, but the billionaire has come back with a much broader blueprint for tackling poverty, explaining ‘‘seismic, not incremental, change is required and the time for action is now’’.

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In one of the more controversial elements of the report, Mr Forrest recommends a ‘‘Healthy Welfare Card’’ that would see welfare payments for indigenous and non-indigenous Australians – not including age or veterans’ payments – paid into savings accounts, with spending restricted to things such as food, clothing, utilities and rent and preventing spending on drugs and alcohol.

Mr Forrest told Fairfax Media that his plan would ‘‘guide people away from the most harmful things in life . . . and that is not income management, that is commonsense’’.

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The Abbott government looks highly unlikely to adopt the radical measure, with Prime Minister Tony Abbott telling reporters in Sydney on Friday that the government had ‘‘no plans’’ to expand welfare quarantining as widely as Mr Forrest was recommending.

He also conceded that the ‘‘bold’’ Forrest review at times ran ahead of public opinion.

When asked if there were any measures he could identify straight away that would be adopted in this term of government, Mr Abbott said the government would now consult the community for six weeks.

He added that he had also set up an ‘‘implementation feasibility task force’’ in his department, which would co-ordinate with the government’s McClure review into the welfare system, which is due to deliver its final report in October.

Declaring that indigenous disengagement with the workforce has reached ‘‘crisis levels’’, Mr Forrest called on politicians to display ‘‘courage’’ and implement his report in full, explaining all the measures contained in it were needed to end the disparity between non-indigenous and indigenous Australians.

Among its 27 recommendations, it calls for tax free-status for innovative indigenous businesses and national reforms to driver licensing, so that people unable to drive due to unpaid fines or traffic infringements are allowed to drive for work in order to keep their jobs.

Under Mr Forrest’s proposals, the federal government would have to procure at least 4 per cent of its goods and services from businesses that were at least 25 per cent indigenous owned, and all governments would have a 4 per cent indigenous employment target.

The mining magnate also recommends that traditional owners be able to lease their land or convert it freehold, in a move he says will enable them to build houses on their land or open it up to ‘‘business investment’’.

Conceding the goal of indigenous equality had defeated well-intentioned governments of all persuasions for decades, Mr Forrest nonetheless insisted ending the disparity was “completely achievable with the strength of will from each of us”.

Under the Forrest plan, maths, English and driver education would be compulsory in jail and all schools would have to prioritise literacy and numeracy lessons in English, as opposed to ancestral languages.

Mr Forrest also wants to clamp down on ‘‘distractions’’ to school education, such as sports carnivals, visiting celebrities and cultural ceremonies.

The recommendations start from the womb – with a call for incentives to encourage women to ‘‘identify their pregnancy as soon as possible’’ so they can be connected with health services.

In a move that echoes the call of the McClure welfare review’s interim report, the Forrest review calls for the number of working age payments to be reduced to a single unemployment benefit. It also wants Newstart to be ‘‘more accurately titled ‘Unemployment Support’ ’’.

On top of this, the review recommends the federal government introduce new requirements that would mean parents have to ensure their children attend school to receive Family Tax Benefit payments. It also suggests the benefit is changed from a yearly payment to a monthly entitlement.

‘‘We’re saying to parents who bluntly refuse to send their kids to school – that the contract they have with the Australian people is to send their kids to school,’’ Mr Forrest said.

Mr Abbott appeared to back Mr Forrest, saying he was "determined" to have form of sanctions where children are not going to school.

"There have to be consequences," Mr Abbott said.

He said the easiest way to bring about change would be for states and territories to enforce truancy laws.

But the Prime Minister said if states were not prepared to do this or do it quickly enough, "I will look at what we can do at a federal level to make this a reality".

PM does not rule out wider income management

Despite his cool reaction to the Forrest plan about controlling how welfare is spent, Mr Abbott said on Friday that he would not rule out ‘‘wider’’ quarantining of welfare ‘‘in the months and years ahead’’.

At the moment, more than 20,000 Australians have their incomes managed voluntarily or compulsorily in the Northern Territory, Perth, the Kimberley region and Cape York, with trials also in some local government areas, including Bankstown, Greater Shepparton and Ceduna.

Some welfare recipients have their incomes managed to deal with issues around child protection, financial hardship and drug and alcohol dependency. Other people have their incomes managed simply because they have been on a particular benefit - such as Youth Allowance - for three of the previous six months.

The current schemes, which have been introduced by Coalition and Labor governments, quarantine at least half of a person’s payment for necessary items and prevent spending on things such as alcohol, cigarettes, home brew kits and pornography.

On Friday, Opposition Leader Bill Shorten accused the government of getting "cold feet" about the Forrest report.

He said that there should be a debate about the report, but noted that Labor did not stand for increasing income management controls across the welfare population.

Mr Shorten argued that "not everyone" who received a government payment was incapable of managing their own finances.

''Labor will not stigmatise everyone who receives a government payment,'' he told reporters in Geelong.